Medshield blames Covid-19 for member contribution hikes

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Medshield principal officer Thoneshan Naidoo.
Medshield principal officer Thoneshan Naidoo.
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  • Medshield has become the first medical aid scheme to announce contribution increases for 2022.
  • The scheme will implement a 6.3% increase on specified benefits across all options.
  • The regulator, the Council for Medical Schemes, recommended that medical aids keep their contribution increases at 4.2% or lower.

Medshield has announced above-inflation medical aid increases for 2022, despite the regulator's recommendation in August that medical schemes should raise their 2022 contributions by no more than 4.2%.

Medshield said it will implement a 6.3% weighted average contribution increase across the scheme.

But the scheme said it has refined its medical aid benefits for 2022 and added more benefits to address the gaps raised by brokers, adding a 5.2% increase on specified benefits across all options.

"We have applied a 5.2% enhancement on specified benefits across all options with no benefit cuts whilst unlocking additional GP consultations for chronic members, amongst others. In the interest of our members, we have repackaged some of the benefits for better value and added ease of access to care," said Medshield Medical Scheme principal officer Thoneshan Naidoo.

The scheme said it had also improved its offering of options available to members, including the new, more affordable hospital plan targeted at sports enthusiasts and low-cost benefit options. However, the availability of these new options is still subject to approval by the Council for Medical Schemes (CMS).

In August, the CMS issued a new guidance note to medical schemes recommending that they limit their 2022 contribution increases to the average inflation rate that Treasury and the SA Reserve Bank expect for next year - around 4.2%.

Covid-19 costs and the unknown future fuelling the increase

In setting the annual contribution increase, Naidoo said that Medshield estimated what it expects to happen next year, primarily because of Covid-19. The scheme considered what it could require to pay members' healthcare claims in the case of a fourth or fifth wave of infections.

Naidoo said there were many unknowns, and Medshield had a duty to ensure that it can financially cover its members' claims.

"When we look into 2022, there are many unknowns, including: is there going to be a fourth and fifth wave? Do we have to cover for booster shots for vaccines?" said Naidoo during the Medshield product launch for 2022 on Thursday.

Medshield said since the onset of Covid-19, it has paid more than R500 million in pandemic-related claims and vaccinated around 40 000 of its members. Naidoo said Medshield had over 16 000 members infected with Covid-19.

"The concern for 16 000 members is long Covid and what symptoms they will be presenting and what healthcare interventions they will need," said Naidoo.

Long Covid is a term that doctors are now using to describe long-term complications in Covid-19 survivors, such as organ damage and the development of chronic diseases such as diabetes, among others.

Naidoo said Medshield also now understands that some of its members may need to get a third Covid-19 jab.

"These are unexpected costs, and we don't know whether it's necessary or not," said Naidoo.

However, he said the scheme was well capitalised with over R2 billion in reserves to pay future claims. The scheme's solvency level of almost 50% was close to double what Medshield is supposed to have in its kitty, according to the Medical Schemes Act.

'Manageable' increase now rather than double-digit spike later

Naidoo said if the scheme had applied a member weighted average contribution increase of less than 6.3%, this could have resulted in above 15% increases in the future. So, Medshield chose to have a manageable increase in 2022 instead to maintain a single-digit increase the following year and the year after.

Naidoo stressed that Medshield does not have a profit motive, does not pay dividends to shareholders, and always passes the benefit from surpluses generated to members.

In rand terms, the monthly contribution increases on MediCurve will be R87.00 per month per member and R228.00 on MediPlus Prime.

"Medshield will keep its contribution increases in the medium and long term at a reasonable level as opposed to going with a smaller increase now and clawing it back with huge future contributions," he added.

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